In previous studies, we utilized microinjection of plasmid DNA into the nuclei of oocytes, fertilized eggs and 2-cell embryos in order to identify cis-acting sequences and trans-acting factors that regulate DNA replication and gene expression at the beginning of mouse development. This work led to the discovery of a novel transcription factor, mTEAD-2, that is expressed at the onset of zygotic gene expression (ZGE) where it is capable of strongly stimulating transcription from promoters or enhancers that contain its sequence-specific binding site. mTEAD-2 is the only member of the TEAD family of transcription factors that is expressed in mouse embryos during the first 7 days of their development. Our objectives are to identify the factors that regulate mTEAD-2 gene expression, to elucidate mechanisms by which mTEAD-2 regulate gene expression, and to identify the role of mTEAD-2 in mammalian development. Investigation of the regulatory region of mTEAD-2 led to the surprising discovery of another gene only 3.8 kb upstream of mTEAD-2. This new gene is a single copy, testis specific gene called Soggy (mSgy) that is transcribed in the direction opposite to mTEAD-2, thus placing the regulatory elements of these two genes in close proximity. mSgy contains three methionine codons that could potentially act as translation start sites, but most mSGY protein synthesis in vitro was initiated from the first Met codon to produce a full length protein, suggesting that mSGY normally consists of 230 amino acids (26.7 kDa). Transcription began at a cluster of nucleotides ~150 bp upstream of the first Met codon using a TATA-less promoter contained within the first 0.9 kb upstream to produce a single, dominant mRNA ~1.3 kb in length. The activity of this promoter was repressed by upstream sequences between -0.9 and ?2.5 kb in cells that did not express mSgy, but this repression was relieved in cells that did express mSgy. mSgy mRNA was detected in embryos only after day 15, and in adult tissues only in the developing spermatocytes of seminiferous tubules, suggesting that mSgy is a spermatocyte-specific gene. Since mTEAD-2 and mSgy were not expressed in the same cells, the mSgy/mTEAD-2 locus provides a unique paradigm for differential regulation of gene expression during mammalian development. We have recently identified the long sought after co-activator of the TEAD family of transcription factors. TEAD-2/TEF-4 protein purified from mouse cells was associated predominantly with a novel TEAD-binding domain at the N-terminus of YAP65, a powerful transcriptional co-activator. YAP65 interacted specifically with the C-terminus of all four TEAD proteins. Both this interaction and sequence-specific DNA binding by TEAD were required for transcriptional activation in mouse cells. Expression of YAP in lymphocytic cells that normally do not support TEAD-dependent transcription (e.g. MPC11) resulted in up to 300-fold induction of TEAD activity. Conversely, TEAD overexpression squelched YAP activity. Therefore, the C-terminal acidic activation domain in YAP is the transcriptional activation domain for TEAD transcription factors. However, while TEAD was concentrated in the nucleus, excess YAP65 accumulated in the cytoplasm as a complex with the cytoplasmic localization protein, 14-3-3. Since TEAD-dependent transcription was limited by YAP65, and YAP65 also binds Src/Yes protein tyrosine kinases, we propose that YAP65 regulates TEAD?dependent transcription in response to mitogenic signals.